With China cracking down on cryptocurrencies, it may become easier and more profitable to mine Bitcoin.
Last month, Beijing called for measures to crack down on bitcoin mining amid concerns about its environmental impact.
This has led to cryptocurrency miners fleeing from China to other regions, such as North America.
China’s crackdown intensified over the weekend, as authorities in China’s hydropower-rich Sichuan Province told miners to stop operations.
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According to reports, more than 90 percent of China’s Bitcoin mining capacity has been shut down.
It is believed that 65 to 75 percent of all global bitcoin mining takes place in China.
Although this campaign is not in favor of Bitcoin miners in China, others may benefit.
What is bitcoin mining
When you think of mining, the image of a gold mine with picks and shovels is probably the first thing that comes to mind. But mining Bitcoin is not the same as searching for gold or other precious metals.
Digital currencies are supported by a wide network of computers around the world. In the case of Bitcoin, these computers are racing to solve complex mathematical puzzles in order to perform transactions.
This process also produces new bitcoins, and miners are rewarded with cryptocurrency if they succeed.
Miner rewards are currently capped at 6.25 BTC, previously it was 12.5 BTC. But since the total supply of the coin is limited to 21 million, the amount rewarded to miners roughly halves every four years.
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It’s about to get easier
The total hash rate, or processing power, of the Bitcoin network appears to have fallen sharply in the wake of Beijing’s crackdown.
In the past month or so, the Bitcoin hash rate has fallen from a record 180.7 million terahash per second — a measure of the speed of crypto miners — in mid-May to around 101 million, according to for data Blockchain.com.
Cryptocurrency experts say that as more bitcoin miners stop working due to China’s restrictions, the share of other miners in the network increases, which could make mining more profitable.
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As more hashrate gets out of the network, the difficulty decreases, and the hash that remains active across the network receives more for its relative share of the mining rewards.
Meanwhile, the difficulty of the Bitcoin network – a measure of how hard it is to mine Bitcoin – has fallen from a record high of over 25 trillion in May to 19.9 trillion last week.
The mining difficulty is adjusted approximately every two weeks, so there is a time delay in the data.
The network difficulty decreases as less online mining equipment is used. This results in less competition for other Bitcoin miners.
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However, another big factor determining miners’ profits is the price of the coin, which has fallen from record highs in recent months on the back of negative comments from Tesla CEO Elon Musk and the Chinese crackdown on the industry.
The value of the coin has almost halved since it reached a record high of nearly $65,000 in April.
The cryptocurrency also fell below $30,000, briefly erasing its 2021 gains. But it has since recovered to trade above $34,000.